Glendale, AZ voids lease with NHL Coyotes, leaving team’s future uncertain

The City of Glendale, Arizona called an emergency city council meeting tonight for one purpose: to vote on terminating the Arizona Coyotes’ lease at Gila River Arena. You may remember two years ago, when the Coyotes seemed bound for anywhere but the desert as the franchise’s reported financial losses piled up and the city faced bankruptcy in what could be considered the worst stadium deal in North America.

The Coyotes' demise in the desert is at hand

You may not see that banner up there for much longer

The NHL even bought the team and operated it for a while, waiting for an ownership group to come in and operate the team, hopefully not at a loss. The deal struck included a payment from Glendale to the Coyote owners’ arena management wing of $15 million per year over 15 years on top of $50 million in subsidies up front. That’s right, the city is paying the team to stay. Glendale was supposed to get limited event revenues, and because the team’s future was supposed to be secure, there were fewer worries about the city’s ability to handle ongoing arena debt. Eventually the team would start winning again and the money would roll in for both parties.

That money never came. The Coyotes haven’t averaged more than 13,000 per game in attendance since 2009. They haven’t been in the playoffs since 2012. Other than the small number of hardcore fans, no one came. The $15 million operating subsidy from the city roughly covers the lost revenue from 4,000 empty seats every home game when compared to other teams. No one’s happy. The current mayor and council have expressed displeasure with the Coyotes, the NFL over the Super Bowl, and its two spring training MLB tenants, the Dodgers and White Sox (at Camelback Ranch). Glendale has overextended itself time and time again, spending so much on pro sports and getting less than zero out of it. And unlike the arrangement at the Coliseum for the two venues there, Glendale, a city about the same size as Fremont, funded the arena itself.

All of this drama set the stage for the big vote. Supporters of the Coyotes came in from all around the West Valley to denounce the plan to kill the lease. The trigger for the lease termination was not about the losses, though the Coyotes have the ability to leave on their own if they accrue $50 million in losses over five years. Instead, Glendale cited a conflict of interest, which allegedly occurred when Glendale’s former city attorney took a position with the Coyotes shortly after the lease was approved in 2013.

After public testimony was cut off, those on the dais made a few comments, culminating with a 5-2 vote to terminate the lease. The Coyotes responded within minutes, threatening to sue Glendale for up to $200 million.

FOR IMMEDIATE RELEASE:
Wednesday, June 10, 2015

GLENDALE, ARIZONA — Arizona Coyotes Co-Owner, President and CEO Anthony LeBlanc issued the following statement following tonight’s Glendale City Council meeting.

‘We are disappointed with the city’s decision to violate its obligations under the agreement that was entered into and duly approved only two years ago. We will exhaust any and all legal remedies against the city of Glendale for this blatant violation of its contractual obligations to us.’

One thing to note is that the Coyotes had themselves reported $34.8 million in losses for 2014-15 season alone. The team’s well on its way to hitting that $50 million mark, and the only consolation it can provide to Glendale is that the city’s loss will be $6 million as opposed to the projected $7 million before the season.

Coyotes fans don’t deserve to go through all of the drama built up over the past decade. Yet they’re powerless, as fans often are. Their limited numbers don’t impress NHL brass, who stalled as long as they could while fighting off relocation rumors and threats. Right now three cities are considered frontrunners for a move, which could come this fall.

  • Las Vegas – A new arena on the Strip is being built by MGM and AEG. While its primary purpose is to be a major concert venue, it will have the capacity to host NHL and NBA teams. The arena won’t be ready until 2016, so a relocated Coyotes squad would play at the MGM Grand Garden Arena or Thomas and Mack Center for a year or so.
  • Seattle – Arena efforts have largely stalled since efforts to buy and move the Kings to the Emerald City died. NHL is also on the radar, though basketball is clearly the primary focus. A rival arena plan has been proposed for Tukwila, not far from SeaTac airport.
  • Quebec City – A brand new venue is nearing completion, and could be ready to host the Coyotes in September. The downside is that a move to Quebec would also cause the league to embark on another round of realignment. The already shorthanded Western Conference (14 teams) would send another one to the East (16 teams), forcing another team to move to the West.

Northern California cities such as San Francisco and Sacramento are not in the offing because both have built-in revenue competition from basketball teams, and the Warriors’ and Kings’ new venues won’t be optimized for hockey. If the NHL is going to move the Coyotes, they’ll go to a place that has minimal competition and an arena with few scheduling conflicts.

The Coyotes and Glendale could also reach some sort of truce, allowing both to co-exist and renew their partnership. It’s hard to see that as every bridge has been burned. The team is bringing legal action Thursday, so the battle is just beginning.

32 thoughts on “Glendale, AZ voids lease with NHL Coyotes, leaving team’s future uncertain

  1. give the team to canada, obviously their fans care a heck of a lot more about hockey than any of those us cities and probably 3/4 of the us cities that have a hockey team.

    you can move detroit back to the west or columbus to the west. geographically they could move to the “western division” with other cities nearby like chicago, st louis, minnesota, winnipeg.

    • Agree, Detroit should of never been moved to the East, with the current configuration of teams. Maybe in the future, but not now, The NHL seems to let the Red Wings have their way, much like the NFL does with the Cowboys.

      • The reason the Red Wings wanted to be in the east is because Detroit is in the Eastern time zone (same with Columbus). It’s not some devious plan, they just want more of their games to start at a reasonable time for their fans to watch.

      • It worked for the NFL. Remember the version of the NFC West with the 49ers, St Louis Rams, New Orleans Saints, Atlanta Falcons and Carolina Panthers?

      • Why doesn’t the NHL have 2 15 team conferences with inter conference play? What they have now is illogical!

      • What works for the NFL where they play one game a week (and usually on a Sunday afternoon), doesn’t necessarily work for the NHL where they have multiple midweek games every week. Playing so many away games at 10PM or later is not good for their TV ratings.

      • Sorry, I was just calling out what a joke some of the division alignments have been in sports with my comment about the NFC West.

        Travel in the playoffs was a big driver for the NHL in their realignment. Teams in the northeast would have very easy travel schedule where it was possible that in the west a team might cross multiple time zones in each round. Teams complained that this gave a competitive advantage to teams in the East.

        Time zones for TV viewership were also an issue.

  2. Potentially $275 from Glendale? Couldn’t the city have bought the team for that?

    • If you buy the team, your potential for losses is theoretically unlimited. The good-money-after-bad deal Glendale signed (and are trying to abandon) limited their losses to a fixed amount.

      The market has spoken, one way or another, the Coyotes will be playing somewhere else soon–whether back in downtown PHX or another market.

      The people have complained about the arena location since day 1. I’ve done the North Scottsdale or Downtown Tempe trip to weeknight games in Glendale a few times; by Bay Area standards, it’s just not that bad. Far easier than mid-peninsula or Tri-Valley to the Shark Tank on a weeknight.

  3. The NHL kept the team in Arizona for years and years despite being unable to find an ownership group and losing Big Big $$. Meanwhile, the league quickly abandoned Atlanta. Go figure.

  4. I don’t think they will be leaving this upcoming season. This will play on for a bit w/ possible legal battles, renegotiation etc. Vegas and Quebec are not ready yet. They were already on track to leave after 2017-18. I hope they stay a few more seasons at least. One correction, the Coyotes were in the Western Conference Finals in 2012 and might of made it to the Finals, except for a few bad calls and a dirty playing Kings team.

    • They could stay this season, but I wouldn’t be shocked to see them leave Glendale if a lawsuit is in the offing. They can always go back to Phoenix on a short term basis.

      • Where, at US Airways Center? It’ll be bad enough to have an off-center rink at Barclays, I don’t think the NHL will want to go back to that in Phoenix as well.

  5. The best alternatives for the ‘Yotes anywhere in what would be considered the “west” are KCMO and Portland. The Sprint Center is sitting ready and without a major tenant, and Moda Center is already used for the WHL’s Portland Winterhawks (though not all the time).

    If the Coyotes move to Quebec, then the league will have no choice but to put the Dead Things back in the west, even though their fans will complain high and hard. They like being in a division with “original six” teams in BOS and TOR and MTL, and the only thing they get back in a move to the west is a renewal of acquaintances with the Blackhawks.

    The NHL wants to expand into the Pacific Northwest, bigtime. Since Seattle still can’t get it’s crap together (anyone remember #binding and #cashy ?), do not be surprised if a move to Portland starts being discussed by the NHL powers-that-be.

    Paul Allen, come on down!

    • Paul Allen supposedly doesn’t care at all about hockey and he would have to be on board for a move to Portland which is why Portland hasn’t been discussed.

      I agree though, Portland is likely better than Vegas, but that doesn’t mean it will happen.

    • Portland, sure, why not?

      KC? Nice arena, but no indication that it’s a market filled with hockey fans willing to pay NHL prices or watch games long-term. Get in line behind the Chiefs, Royals, college hoops, NASCAR, etc… You’d probably do better in Milwaukee, a smaller market (29 CSA vs, 23 for KC) where they actually like hockey.

  6. While Quebec makes the most sense, I bet they end up in Vegas for at least the short term. The Western conference teams pushed hard for the realignment because of the huge travel differences between the West and East coast teams. Seattle also probably makes more sense than Vegas, but they don’t have an arena.

    Long term If Seattle gets an NBA team, that will also get them an arena and my guess is that they become the long term landing spot for the team as I just don’t see a team being able to survive in Vegas.

    The NHL still has to deal with the Panthers and Quebec is the much easier landing spot for them because there would be no need for realignment.

    • The problems with Quebec:

      1. It’s pretty small-towny (I was there in March and went to a Remparts game at the Colisee where the Nordiques had played). Some beautiful sights and friendly people, but not a whole lot there.

      2. As the provincial capital, it probably suffers from the lower corporate base that Sacramento does.

      3. Non-Quebec-bred players don’t want to play in a less-than-happening city where everyone speaks French, so you have to overpay to get any free agents.

      4. Negotiating with the arena owners.

      Then again, Vegas could be Phoenix without the subsidy (no way a private arena owner is going to give them any kind of sweetheart deal), and Portland’s apparently not interested.

  7. Remember back when the BlackBerry CEO wanted to move the Yotes to Hamilton?

    Good times, people…good times.

  8. Neither the Grand Garden, Thomas & Mack, or the Mandalay Bay Events Center would care to host 40-50 hockey games unless: a) the team foots the cost for converting the arena to/from hockey every time it’s necessary; and b) agrees to send the team on the road for as much as five weeks in November and December while the National Finals Rodeo is in town.

    • They might have to play a few games at the smallish Orleans Arena that hosted the Wranglers before they folded, if the Vegas now option were on the table, But doesn’t the NHL see Vegas as ripe for expansion $$$?

      • Besides the Coyotes, the Panthers and the Hurricanes aren’t in the best of shape either. While they’re in better shape than these three, Columbus isn’t too far behind.

        Doesn’t mean the NHL will do it this way but they need to shore up their existing teams before they can even consider expansion.

  9. In term of television rights and market size…..no one has mentioned Houston as a possible relocation, if the NHL wants the Coyotes to stay in the west.

    Portland would be ideal, the west coast NHL teams would love that, but the market and TV audience is too small. But, against high odds, if the Coyotes move Portland and thrive there, who knows, maybe the A’s will join them in the next 5-8 years.

    • Does Houston have minor league hockey history (too lazy to look it up)?
      What are the rules if NHL decides to take over a minor league town? Expensive? Easy? Thanks in advance for your help!

  10. Seattle or Quebec City. NHL team should have never been put in the desert.

  11. This is how dumb Gary Bettman is, he only wanted the coyotes to say because he wanted to prove Moores (old owner) wrong Phoenix is not a viable NHL market.

    He also wanted to stop the blackberry CEO Jim Basille from moving the team to Hamilton without league approval.

    Bettman’s pride got in the way of doing the right think.

    Bettman should have let the team move to Hamilton. People love hockey in Canada, you can be small market and make tons of money.

    Ask the Winnipeg Jets how much more money they make vs when they were in big market Atlanta?

    Even if the coyotes win they get no fans. Bettman’s vision of spreading hockey in the southwest has miserably failed. Dallas loses money big time too and that’s a big market.

    Coyotes should move to Quebec, it’s a no brainer.

    New arena with hockey starved fans?? They will sell out every game within hours of tickets going on sale….just like Winnipeg.

    Bettman has to step in and move the team next season.

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